Eurozone pulls itself out of deflation in June - just

 
Emma Haslett
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Inflation will begin to rise, analysts suggest (Source: Getty)

The Eurozone definitely managed to heave itself out of deflation in June, its official statistics authority confirmed today - but only just.

Figures published this morning by Eurostat confirmed inflation hit 0.1 per cent in June, up from minus 0.1 per cent in May.

The figure was pushed up by inflation in restaurants and cafes, rents and tobacco - but the falling price of oil continued to have a deflationary effect, with transport, heating oil and gas all dragging down prices.

With non-Eurozone countries factored in, European Union inflation was flat at zero per cent.

"Stubbornly low inflation is one concern that, for now, is yet to be strongly affected by the UK’s Brexit vote," pointed out Dennis de Jong, managing director at UFX.com.

“[ECB President Mario] Draghi won’t be distracted by the UK’s political wrangling, as his eyes will be drawn to other issues more within his control, such as how to help Germany maintain its strong start to the year or Greece’s continued participation in the euro."

Read more: Could Italian bank woes lead to a return of the Eurozone crisis?

Howard Archer, chief UK and European economist at IHS Markit, suggested inflation will now begin to edge up.

"We suspect that May will prove to have been the last month of deflation and that Eurozone consumer price inflation will edge gradually higher over the coming months.

"With Brent oil currently trading around $47 a barrel, the year-on-year drop in energy prices should progressively close over the coming months and turn positive later in the year.

"It is also notable that the European Commission survey shows pricing expectations for manufacturers moved into positive territory in June for the first time since October 2014 and reached a 29-month high, although they were still below long-term norms."

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